Venture Capitalists Take Fight Against IP Bill To The Hill

By Juliana Gruenwald

Talk about good timing. One day after legislation was proposed to crack down on infringement on foreign websites was introduced, more than a dozen venture capitalists came to Washington Thursday to complain that the measure could have drastic consequences for technology startups and innovation.

The venture capitalists were set to meet with key lawmakers and staff Thursday on Capitol Hill including GOP and Democratic House leadership and members of the House Judiciary Committee. The trip was organized by the Consumer Electronics Association, a fierce critic of the House bill and a similar Senate measure.

The House measure was introduced by House Judiciary Chairman Lamar Smith, R-Texas, with bipartisan support. Among the many provisions in the House bill and a measure passed by the Senate Judiciary Committee in May that worries the venture capitalists as well as civil libertarians, Internet engineers and others is a provision that would require service providers to redirect users away from sites engaged in piracy and counterfeiting.

Brad Burnham with Union Square Ventures, which has invested in social media sites such as Foursquare and Twitter and game maker Zynga, told Tech Daily Dose that the language in the House bill is too broad and could force action by a wide range of Internet-related firms, including social media sites. He and others said they worry that the potential costs of having to comply with the law could prevent many tech startups from getting off the ground.

"It makes it infinitely harder to get startups going" in the United States, Josh Mendelsohn, a partner with a VC firm called Hattery, said. He added that if the bill passes, it may force some startups to move abroad.

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The venture capitalists acknowledged that they have been slow to react to the legislation and to rally opposition. And despite their visit, they said they do not have the time or resources to match the lobbying campaign being waged by supporters of the legislation. Intellectual property owners, labor groups and other supporters of the bill have been lobbying for at least two years for measures they say are vital to protecting their products from being stolen by foreign infringers.

They argue that the current tools available to them such as the Digital Millennium Copyright Act, which requires websites and others to take down infringing content after being notified of its existence on their sites, are of little use in targeting infringers who haves set up websites offshore.

Judiciary Intellectual Property Subcommittee Chairman Bob Goodlatte, R-Va., one of the House bill's chief co-sponsors, told Tech Daily Dose Thursday that he and the bill's other authors are open to making additional changes but voiced frustration that many of the bill's critics have failed to offer alternative solutions to addressing a growing problem.

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